Many Americans are outraged by the U.S. Supreme Court
decision last June that allowed the city of New London, Conn., to take the home
and property of Susette Kelo to make way for a private economic development
project. In this case, the power of eminent domain was not used for a public
function, such as a government building, school or highway, but instead to
transfer an individual’s property to a private developer.

Many state legislatures, including Michigan’s, are moving
to pass laws to prevent the abuse of power typified in the Kelo case. The
Michigan Senate has passed and sent to the House legislation that would provide
some protections against government takings of private property for economic
development.

A landowner’s property should not be taken by the
government for economic development purposes. But in Kelo-type cases, at least
the government must monetarily compensate the landowner. Such is not the case
with a "regulatory taking."

Regulatory takings differ from physical takings in that the
government does not assume possession of the property. Rather, the owner’s use
of the property is restricted by regulations — most commonly environmental
prohibitions.

Regulatory takings of private property have become common
in Michigan and throughout the country. Among the most common type of regulatory
takings in Michigan is wetlands regulations enforced by the state Department of
Environmental Quality. Wetlands may offer environmental benefits, such as
providing wildlife habitat and improving water quality by filtering runoff near
streams and lakes. However, the benefits of preserving wetlands accrue to
society in general, not just the landowner whose property features wetlands.
Often times, in fact, the presence of wetlands is a liability when the landowner
is barred by regulation from using the property.

A regulatory taking is, in effect, a tax imposed on a
single property owner. If the land is worth $200,000 before its designation as
wetlands, but only $125,000 after such designation restricts use of the
property, the cost of the regulation — $75,000 — is borne solely by the property
owner. But the cost of protecting wetlands — or any other social good — should be
carried by all of society.

Private property shall not be taken for public use
without just compensation therefore being first made or secured in a manner
prescribed by law. Compensation shall be determined in proceedings in a court of
record.

It has been argued that some regulation of private property
is permissible — such as the zoning of property as commercial or residential —
and therefore does not amount to a government taking. The courts, however, have
carried that rationale to an extreme, consistently ruling that in order for a
taking to occur on property containing wetlands, nearly all use of the land must
be lost. This extreme standard set by the courts results in the denial of
compensation in most wetland cases, since parcels of property seldom contain 100
percent wetlands. Wetlands typically are interspersed with uplands. Furthermore,
regulatory policy should be set by elected representatives of the people, not
activist courts.

The protection of constitutional rights needs to be
reintroduced to the system of regulation. If the government deems it necessary
to restrict the use of private property for environmental protection (or any
other reason), landowners should be compensated. It is one thing to protect
wetlands on property held in public trust; it is entirely something else to
require private landowners to bear those costs without compensation.

Government officials, with the assistance of judges who
have shown little regard for private property rights, have been able to take
private property for politically popular causes without having to pay for it. As
lawmakers work to protect property owners from government takings for economic
development, they would be wise to also address the widespread problem of
regulatory takings.

If the Legislature fails to protect private property, it
will fall to citizens to address the issue through a ballot initiative. That is
precisely what happened a year ago in Oregon, where voters handily passed a
ballot initiative requiring state government to pay landowners for the loss of
use of their property. The Oregon law specifies that if the government cannot
afford to pay the landowner, or chooses not to, then the land use restrictions
do not take effect.

A lower court subsequently declared the Oregon law to be
unconstitutional, and issued an injunction barring its enforcement while the
case is under appeal. Nevertheless, it is past time for Michigan property owners
to be afforded the protections demanded by Oregon citizens and which are among
the most fundamental of our constitutional rights.

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Russ Harding is senior environmental policy analyst for the
Mackinac Center for Public Policy, a research and educational institute
headquartered in Midland, Mich. Permission to reprint in whole or in part is
hereby granted, provided that the author and the Center are properly cited.